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Fast food chain McDonald's has sued the city of Milan after it was evicted from a prime spot among luxury retailers Gucci, Prada and Louis Vuitton in the picturesque nineteenth century Galleria Vittorio Emanuele II.

The restaurant was the third busiest in Italy and had been trading in the busy shopping arcade for 20 years, but it will now be replaced with a second Prada store.

More than 5,000 people queued outside the restaurant for its final day on Tuesday as staff handed out free food and drinks. "We wanted to say goodbye to the Galleria with a smile," said spokesman Paolo Mereghetti.

The decision to evict the restaurant came after a public tender for the location, which McDonald's claims was "unfair". It has now filed a lawsuit against the city demanding €24m in damages.

The business estimates that the eviction will cost €6m in lost sales, but that no jobs will be lost.

The restaurant claims that the tender called for a "business showing excellence in innovation, technology and communications" to take the spot, which essentially ruled it out. The city denies that the tender was unfair.